Professional Documents
Culture Documents
2. Greater transparency
Unlike Ulips, in a traditional life insurance policy youre not aware of how your money is invested, where it is invested and what is the value of your investment.
Types of ULIPs
Endowment Pension/Annuity Capital Guaranteed Highest NAV
structure for charges and fees remains the same. The different types of fees and charges are Premium Allocation Charge Mortality Charges Fund Management Charges Policy/ Administration Charges Surrender Charges Fund Switching Charge Guarantee charges Miscellaneous charges Service Tax Deductions
Insurance companies may use different nomenclatures like loading/ upfront charges/ premium allocation etc.
If we compare with mutual funds they use the words like loading/ upfront charges etc.
As per basic concept of ULIP policy holder pays a certain amount as premium to purchase a policy. Insurance companies deduct their expenses like allocation charges, insurance coverage, administrative expenses, flat fee etc. Balance moneys go for investments in a portfolio consisting of debt instruments and equity market in a proportion decided by policy holder at the inception of contract. To manage the fund insurance companies like mutual fund companies charges fund management expenses or Asset management expenses.
Various types of funds are offered by Insurance companies, with low to higher investments in share market. Policy holder has to choose one.
However most insurance companies allow policy holder to switch from one fund to another. Again while comparing this facility varies from one Insurance company to another and one product to another.